Canadian power producer TransAlta Corp (TA.TO) said its unit entered into an agreement with Fortescue Metals Group Ltd (FMG.AX) to buy a 125 megawatt dual-fuel power station in Western Australia for $318 million.
TransAlta also sold 19.3 million common shares for nearly C$275 million ($278.78 million) in connection with the deal.
The 125-MW Solomon power station will be fully contracted with Fortescue under a long-term power purchase agreement.
The under-construction power station will likely be commissioned in the fourth quarter.
TransAlta shares closed at C$14.68 on the Toronto Stock Exchange on Tuesday.
($1 = 0.9865 Canadian dollars)
(Reporting by Shounak Dasgupta in Bangalore)